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Things worth reading: 25th January 2012

January 25, 2012 by skinnercm   Comments (0)

Things we're reading today include ...


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Bank of Thailand Cuts Interest Rate 25bps to 3.00%

January 25, 2012 by CentralBankNews   Comments (0)

The Bank of Thailand cut its benchmark 1-day bond repurchase rate by 25 basis points to 3.00% from 3.25%.  Bank of Thailand Assistant Governor, Mr. Paiboon Kittisrikangwan, said: "The MPC assessed that inflationary pressure remains contained, while headwinds from the global economy continue to pose  risks to Thailand's economic growth. The MPC therefore voted unanimously to reduce the policy rate by 0.25 percent, from 3.25 percent to 3.00 percent per annum, effective immediately. With  private sector confidence improving but still fragile, this policy accommodation should help accelerate the return of economic activity to normal levels."

The Bank of Thailand also cut the rate 25bps at its December meeting, and previously raised the rate to 3.50% at its August meeting, and increased the interest rate in July last year by 25 basis points to 3.25%.  Thailand reported headline inflation of 3.6% in December, down from 4.29% in August, 4.08% in July, 4.1% in June, compared to 4.19% in May, and 4.04% in April.  The Bank of Thailand has an inflation target range of 0.5% to 3.0%.  

The Thai economy grew 0.5% in the third quarter, after 0% growth in the June quarter, and 2% in the March quarter, placing annual GDP growth at 3.5% (2.7% in June, and 3.2% in the March quarter).  The Thai baht (THB) has weakened about 2% against the US dollar over the past year, while the USDTHB exchange rate last traded around 31.53

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Central Bank of Turkey Keeps Rate at 5.75%

January 24, 2012 by CentralBankNews   Comments (0)

The Central Bank of the Republic of Turkey kept its benchmark 1-week repo rate unchanged at 5.75%.  The Bank said: "The Committee has indicated that tight monetary policy stance should be maintained for a while in order to  keep inflation outlook consistent with the medium term targets. However, given the prevailing uncertainties regarding  the  global economy, it would be appropriate to preserve the flexibility of the monetary policy. Therefore, the impact of the measures undertaken on credit, domestic demand, and inflation expectations will be monitored closely and the amount of Turkish lira funding via one-week repo auctions will be adjusted in either direction, as needed."

The Turkish central bank last cut the benchmark rate by 50 basis points when it held an emergency meeting in early August, the bank also cut its benchmark interest rate by 25 basis points to 6.25% in January this year.  The Turkish central bank also adjusted required reserves in late July.  Turkey reported annual consumer price inflation of 10.45% in December, up from 7.7% in October, 6.7% in August, 6.3% in July, 6.2% in June, 7.2% in May, 4.26% in April, and 3.99% in March, and above the Bank's full year inflation target of 5.5%.  

Turkey's economy grew 1.7% in Q3 (1.2% in Q2), placing the Turkish economy up 8.2% on an annual basis (8.8% in Q2).  The Turkish Lira (TRY) has weakened by about 16 percent against the USD over the past year, and last traded around 1.82 against the US dollar.


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Magyar Nemzeti Bank Holds Interest Rate at 7.00%

January 24, 2012 by CentralBankNews   Comments (0)

The Magyar Nemzeti Bank held its central bank base rate unchanged at 7.00%.  The Bank said: "In the Council's judgement, the Hungarian economy is likely be stagnant next year, with growth expected to resume only in 2013. The level of output will remain below its potential over the entire forecast period. As the effects of the indirect tax increases and the exchange rate depreciation wane, the disinflationary impact of weak domestic demand is likely to become the dominant factor shaping inflation."

The Magyar Nemzeti Bank previously hiked the rate 50 basis points at its November and December meetings, after last raising it 25 basis points in January this year.  Hungary reported annual inflation of 3.9% in October, up from 3.6% in September and August, 3.1% in July, 3.5% in June, 3.9% in May, and 4.7% in April.  Hungary's Central Bank has a medium term inflation target of 3%, while the Bank said annual inflation for 2011 was 3.9 percent.

The Hungarian economy grew at an annual rate of 1.4% in the September quarter, 1.5% in the June quarter, compared to 2.4% in the march quarter, and 1.9% GDP growth recorded in the December quarter last year.  The Hungarian forint (HUF) has lost about 14% against the US dollar over the past year, the USDHUF exchange rate last traded around 230


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The Risk Telescope — Credit Rating Agency Regulation

January 24, 2012 by BCM International Regulatory Analytics   Comments (0)

Finance is filled with informational asymmetries.  Lenders have more information about their borrowers than outsiders (assuming the lenders have done their due diligence).  Regulators have more information about the banks they oversee than outsiders (including shareholders).  Periodic abuses of those informational asymmetries over the decades has led to a range of regulatory requirements designed to increase transparency and level the playing field among different types of agents that require access to information in order to make good decisions.


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